WEEKLY MARKET DIGEST: GOLD AND OIL BREAK SUPPORT, WILL HOT MONEY BEAT SMART MONEY? $GLD $SLV $USO $DIA $SPY $QQQ $TBF $TBT

WEEKLY MARKET DIGEST: GOLD AND OIL BREAK SUPPORT, WILL HOT MONEY BEAT SMART MONEY? $GLD $SLV $USO $DIA $SPY $QQQ $TBF $TBT

(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. ) 

WHO WILL WIN: HOT MONEY OR SMART MONEY? GOLD BREAKS ANOTHER KEY SUPPORT

The U. S. stock market is now at an inflection point.  A battle royale is about to begin between hot money that is afraid of being left behind and is buying aggressively vs. smart money that is selling into rallies because the market is over valued and overbought in the very short-term.  Whichever side appears to be winning, machines with automated algorithms will jump on that side exaggerating the move.

German Parliament approves Greek bail out.

Core CPI came at 0.2% vs. 0.2% consensus.

Building Permits came at 1343K vs. 1150K consensus.  Housing Starts came at 1174K vs. 1120K consensus.

Gold has broken another key support in the zone of $1138 to $1140.

Oil breaks support at $51.  Please note that we are switching over to September contract in oil.

Interest rates are falling after Yellen’s testimony yesterday in which she stressed that the Fed is about to raise interest rates.  At the time of this writing, it is not clear why interest rates are falling.

Our very, very short-term early stock market indicator is neutral but can easily explode to either side.

Gold futures are at $1139, silver futures are at $14.85, and oil futures are $50.67.

S&P 500 resistance levels are 2132, 2150, and 2200; support levels are 2100, 2063, and 2038.

DJIA futures are down 11 points.

EU LOAN FOR GREECE, SILVER BREAKS SUPPORT

After approval of the bailout by the Greek Parliament, EU has agreed for a short-term $7 billion loan for Greece.

Silver has broken major support at $15.  Gold is drifting down.

Momo crowd is aggressively buying oil.

Interest rates are range bound.

Our very, very short-term early stock market indicator is positive but can quickly reverse to the downside as the market is overbought.

Gold futures are at $1142, silver futures are at $14.88, and oil futures are $51.63.

S&P 500 resistance levels are 2132, 2150, and 2200; support levels are 2100, 2063, and 2038.

DJIA futures are up 80 points.

SMART MONEY AGGRESSIVELY SELLS GOLD

Core PPI came at 0.3% vs. 0.1% consensus.  Industrial Production came at 0.3% vs. 0.2% consensus.  Capacity Utilization came at 78.4% vs. 78.1% consensus.

The foregoing data shows that the U. S. economy is progressing well.

Yellen says the U. S. well on track to raise interest rates later this year.

Stocks in Shanghai fell again.

Vote in Greek Parliament will take place later today.

At dawn today, Smart Money aggressively sold gold, silver and oil.  Gold has broken major support at $1150.  Oil has given back about half of the rise from yesterday’s short squeeze.  Silver is sitting at a major support at $15.

Interest rates are ticking up.

Our very, very short-term early stock market indicator is neutral.

Gold futures are at $1147, silver futures are at $15.07, and oil futures are $52.21.

S&P 500 resistance levels are 2111, 2132, and 2150; support levels are 2063, 2038, and 2017.

DJIA futures are unchanged points.

A MASSIVE SHORT SQUEEZE IN OIL ON IRAN DEAL

After long negotiations, Iran has reached a deal on its nuclear operations with the world powers. The U. S. Congress still needs to approve it.  There is significant opposition in the Congress.  However, it will be very difficult for those who oppose this deal to overcome Obama’s veto.

Iran is rumored to have 25-30 super tankers full of oil on the sea.  Iran will probably now bring that oil on the market at a discount.  The oil market is already over supplied by about 1 million barrels a day.  Starting sometime in 2016, Iran will be adding another million barrel supply.  Based on supply demand, WTI right now should be trading around $45.  However the mechanics of the market are such that a major short squeeze in oil is in progress.  The strength resulting from this short squeeze should be used to build short positions.  Please see earlier posts.

Gold and silver are trying to rally on weak retail data.

Interest rates are dipping on the prospects of lower oil prices.

Euphoria in the stock markets across the world is over done.  Greece still has a very difficult task ahead and there is still 20% probability of an eventual Grexit.

Our very, very short-term early stock market indicator is neutral.

Gold futures are at $1156, silver futures are at $15.37, and oil futures are $51.96.

S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.

DJIA futures are down 29 points.

THE MODEL PROVES CORRECT, GREECE DEAL REACHED

After a tumultuous weekend of marathon talks, early this morning Eurozone finally reached a deal on Greece.  It is still not all clear.  The terms of the deal are extraordinarily harsh.  Greek parliament is required to approve several difficult measures within 72 hours.  From an investment perspective, there is still 20 to 30% probability that the deal may not be consummated as envisioned; such an event may cause more volatility in the markets.

Smart Money is lightly selling gold and euro.

There is speculation that the U. S. and Iran have reached a nuclear deal and Kerry will announce the deal this morning.  The speculation is not confirmed.  Those interested in trading oil may want to stay extra alert to the Real Time Feed.

Interest rates are rising as investors sell U. S. Treasuries on Greek deal.

Our very, very short-term early stock market indicator is positive.

Gold futures are at $1154, silver futures are at $15.49, and oil futures are $52.05.

S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.

DJIA futures are up 125 points.

 

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